Tech giant Microsoft (MSFT) is likely not eager to lose any connection to OpenAI, despite how much it may want to break away and become its own operation. Thus, the negotiations going on between the two are hitting several speed bumps as intellectual property issues, access to application programming interfaces (APIs) and more muddy the waters. But investors are glad to see Microsoft fight back, and sent shares up fractionally in Wednesday afternoon’s trading.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
There is a lot at stake in this negotiation, as it would open up equity stakes in OpenAI, something never before seen. But with several sticking points between the two sides, any kind of equity availability would not happen until next year. And that could be a problem; without a deal by the end of 2025, SoftBank (SFTBY) could pull its own $10 billion planned investment altogether.
Indeed, intellectual property and API issues are a problem. But so too is the fact that Microsoft has an exclusive hosting deal with OpenAI using the Azure cloud to run OpenAI. OpenAI wants to expand outward, but naturally, Microsoft would rather that traffic stay on its own platforms. There is some sign of compromise, though, as an agreement might branch OpenAI out to government clients that do not use Azure.
The End of the Console Wars?
The console wars have been part of the gaming landscape since Nintendo (NTDOY) and Sega (SGAMY) took each other on. But the latest iteration may be coming to an end, as exclusives start making their way to other platforms. The future looks a lot less combative, and a lot more shared.
While not everyone is so sure, the arrival of Helldivers 2 on every platform does certainly lend credence to the concept. Growing potential that the next Xbox could include Steam support, basically turning it into a kind of gaming PC with a very specific user interface, only adds to the potential. Thus there is the very real potential that the notion “we game where we game” could be truer than expected.
Is Microsoft a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 33 Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 22.27% rally in its share price over the past year, the average MSFT price target of $624.08 per share implies 23.53% upside potential.
